Court review of pension cuts to focus on labor’s chief complaint

The chief complaint labor unions had about San Diego’s five-year old pension cuts is one of two issues the state Supreme Court plans to consider when reviewing an April appeals court decision that vindicated the city.

If the Supreme Court decides to overturn the pension cuts, the city could be forced to spend millions creating retroactive pensions for more than 3,000 workers hired since 2012.

City labor unions have always said it was illegal for then-Mayor Jerry Sanders and the City Council to put Proposition B, the city’s pension overhaul measure, on the 2012 ballot without first meeting with labor leaders about the proposed pension changes.

The Fourth District Court of Appeal ruled in April that Sanders and the council did nothing wrong. But the Supreme Court announced Wednesday it will review that ruling, and said on Friday the review will include whether there is a legal obligation to meet with labor in such a situation.

RELATED: Appeals court vindicates San Diego’s 2012 pension cutbacks

The second issue the court’s review will focus on is whether the appellate court overstepped its authority in April when completely overturning a 2015 Public Employment Relations Board ruling that the pension cuts were illegal.

Labor unions and PERB contend the appellate court needed to restrict its review of the labor board ruling to whether it was clearly erroneous, not evaluate the entire ruling from the ground up.

Ann Smith, an attorney for the city’s largest labor union, said Friday’s announcement is good news for opponents of Proposition B because it shows the Supreme Court will focus its review on the issues she raised.

“They are getting at the central issue of when does the duty to (collectively) bargain arise, by whose conduct and when,” Smith said.

The second issue, she said, gets to the heart of whether the Fourth District Court of Appeal had the right to veer from precedent and use a “de novo” standard of review, meaning they could look at the case without regard to the PERB ruling.

A spokesman for City Attorney Mara Elliott declined to comment on Friday’s announcement of the issues the Supreme Court will review in the case.

On Thursday, the spokesman said the court’s decision to review April’s appellate ruling isn’t a shock.

“It is understandable that the Supreme Court would want to review a case where an appellate court and a state agency have such different views of the law, particularly in a matter of statewide significance,” said Gerry Braun, Elliott’s chief of staff.

The measure replaced guaranteed pensions with 401(k)-style retirement plans for all newly-hired city employees except police officers, making San Diego the only jurisdiction in California not to offer traditional pensions to new employees.

Estimates of how much it would cost the city to reverse Proposition B have ranged from $100 million to less than $20 million, but even the people making such guesses have always qualified them based on a wide number of variables.

It’s rare for the state Supreme Court to issue a notice of review, which happens in less than five percent of civil cases where a review is requested.

If the court had decided against a review, April’s appellate ruling would have become a published precedent throughout California.

The lawsuit filed by Smith’s union, the Municipal Employees Association, and three other unions representing city employees says Mayor Sanders illegally circumvented state labor law by describing Proposition B as a citizens’ initiative but using the power and influence of his office to gather 116,000 signatures on its behalf.

City employee involvement with the measure would require negotiation with labor unions under state law, the suit says.

Sanders has said he acted as a private citizen, not as the mayor, when he helped create the measure and worked to help get it passed.

The Fourth District Court of Appeal ruled that the state’s requirement that city officials confer with labor groups about ballot measures applies only to measures placed on the ballot by leaders of a government agency, not by a citizen’s initiative such as Proposition B.

The judges said it was “undisputed” that Sanders and others in the city government provided support to the proponents of Proposition B and the subsequent campaign, but that such involvement didn’t require those city employees to confer with labor leaders.

Arguments in the case won’t be heard until at least 2018 and possibly 2019.

Briefs must be filed by late August — within 30 days of the Supreme Court’s notice of review last Wednesday.

While the court could choose a variety of remedies, overturning the appellate court ruling would likely force San Diego to create retroactive pensions for more than 3,000 workers hired since July 2012.

City officials have said that would not only be costly, but quite complicated and cumbersome.